Their are two versions of this answer. The long version and the short, I'll
start w/the 'Long Version' or if you are looking for the cut and dried
answer skip down to the 'Short Version'.
***LONG VERSION***
Hmmm....well lets see are you trying to figure out initial startup cost or
running cost because those are two seperate things.
Startup cost are all your initial or one time expenses. Usually all the
equipment you will need to start and keep the business running.
This is a straightforward equation.
The greater the quantity of bio-diesel you want to process at a time the
longer the time for a finished product.
Your going to have to figure out your efficiency curb by how many gallons
per week you plan on processing. Smaller batches process faster but in the
long term use more energy to produce the same net amount of fuel. (energy =
cost/expense) The size of your plant in terms of how much you plan to
produce will determine your intial startup cost.
Also you have to take into consideration. Leasing a site, utilities
deposits. If using an old structure in many cases you will have to upgrade
the fire surpression system. Permits, business licenses etc..etc...Startup
cost are never fully realized until at least the first fiscal year has
occured. This is a floating point equation and alot of decisions will have
to be made about "needs" and "wants". For the first 5 years you should stick
w/buying only what you need to run the business and pursue the "wants" after
you have a solid foundation.
Running cost are seperate from startup cost. That is the actual statement
that figures out wether you are profitable or not. Running cost are those
expenses that are occured in the running of your business. To include
chemicals, maintenance, salaries, expenses, insurance,
advertising/marketing, lawyer fees, transportation/collection/distribution
and the all important savings account. (You should always attempt to save up
money and prevent your cost from exceeding your profits as much as possible,
you are not the govt. and cannot afford to spend more money than you make).
Your actual startup/running cost will be based on your calculations at the
end of your business plan. Things will be obviously cheaper for you if you
design and construct your own equipment, but if you do not have the ability
or talent to pull this off then you will need to hire someone to do this for
you.
If you looking to manufacture a serious quantity of fuel then your initial
startup investment should not exceed your gross profits over a 5 year
period. Or in simple terms dont spend more money then you can potentially
pay off in a 5 year period or reach the near or break even point. Much
easier said than done, but alot of business never make it to fiscal year
number 4 because of poor financial planning.
Get into all the finance classes you can, understand completly the terms of
your loans. Get a competent friendly accountant. Most banks have free
materials and sometimes free classes on understanding different fianance
options and www.score.org offers free confidential assitance and workshops.
Take advantage of any free business managment or even pay courses you can.
Buy and organizer/date book you will use and live buy it. It will save you
many headaches. Manage your time effectivly and set and abide by deadlines.
****SHORT VERSION*****
Now if your looking for the short answer. Operating cost can be anywhere
from $.65-.75 USD per gallon for most plants. That figure can be lower or
higher depending on a multitude of factors. [See LONG VERSION for factors].
****End of SHORT VERSION****
For homework go see how not to startup/run a business. It's a documentary
called "Startup.com". Playing in a US cinema near you. Take notes and dont
make the same mistakes they did. You will make mistakes in business, every
business does. However your financial strategy is the sole thing that will
insure that you stay in business. Rule #1 in business always have a backup
strategy, never put all your eggs in one basket. Rule #2 Never forget rule
#1.
For reference I've started, owned and sold two very successfull businesses.
(Startup cost where payed for by month 9) I sold both for a profit and they
each had an excellent customer base that I couldnt take w/me. (I changed my
locale to the other side of the country and back).
Once I get my operation up and running I will be availble for consultant
work and/or turn-key business plan development. However until that moment I
hope I answered your question. There is no right or surefire answer to your
question. But I hope you have a little more insight.
Business is simple and complex. The simple objective is to turn a profit,
but there are alot of complicated decisions that have to be made first.
regards,
cordain
dulles, va (usa)
From: "david e cruse" <[EMAIL PROTECTED]>
Reply-To: biofuels-biz@yahoogroups.com
To: <biofuels-biz@yahoogroups.com>
Subject: [biofuels-biz] cost
Date: Wed, 30 May 2001 16:05:08 -0400
Hi Keith & Steve,
I would like to know an easy way, if
there is one, to figure what my cost will be, in a gallon
of biodiesel, in any given batch that I process. How do
you figure in your start up costs i.e. equipment, chemicals,
etc. ?
Thanks,
David Cruse P.S. Congrats on the new site.
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